Cryptocurrency miners have triggered a severe energy crisis in Kazakhstan. And it’s not the only country affected.
A dozen protesters killed, twelve police officers dead, several thousand injured, internet and phone outages, a state of emergency declared… At the time of writing, Kazakhstan and its economic capital, Almaty, are engulfed in a near civil war. Although the situation is the result of several factors, much of the responsibility lies with Bitcoin miners. Explanation.
Cryptos that are too greedy
The riots, which started four days ago, follow the government’s decision to launch a new pricing system for compressed natural gas. This fuel, widely used to run Kazakh vehicles has seen its price double from 12 to 24 cents per liter. This measure, considered by a large part of the population as an attempt to enrich the industrialists of the sector, comes in a context of energy shortage. Compressed natural gas is also used to produce 20% of the country’s electricity. Yet the latter has experienced a series of major outages due to the massive influx of cryptocurrency miners.
Remember in May 2021: China decided to ban Bitcoin mining farms from its territory because of the energy and ecological cost of the latter. This decision was followed by a ban on all cryptocurrency transactions last September. As a result, miners have swarmed like locusts and have largely moved to Kazakhstan. According to the Financial Times, nearly 87,849 farms jumped in electricity consumption by 8%.
What’s the next target?
Kazakhstan is not the only country affected by these electricity shortages. Kosovo also announced a ban on cryptocurrency mining on January 4. According to the Minister of Economy and Energy, Artane Rizvanolli, this measure should allow the country to cope with energy shortages after the closure of the country’s largest power plant in December 2021. But as in Kazakhstan, this ban may not be enough. Indeed, if the miners officially registered with the country’s authorities are forced to stop their activity, there are still “grey miners”, i.e. groups of unregistered and therefore illegal individuals, who continue to operate machines. According to Reuters, which interviewed one of these miners, they can earn up to 2,500 euros per month against an expense of 170 euros in electricity. Enough to whet the appetite. In Iran and Texas, other lands of adoption of cryptomineers, energy shortages have become … commonplace.